Avoid these five common, costly divorce mistakes
Jun 4, 2012, 11:50 a.m.
When you're getting a divorce, you are probably experiencing emotional and financial trauma. If you're over 55, you must avoid financial mistakes. Here are some tips to keep out of harm's way financially. Divorce advice should include the following:
Do not become a financial disaster. Once you're convinced your spouse is contemplating getting a divorce, copy all important financial documents, open a separate bank account in your own name, and notify all joint creditors, banks, credit unions and investment accounts in writing.
Do not "fudge" a budget in your favor. Agreeing to a maintenance agreement that you cannot meet is a financial killer. The court will approve maintenance agreements based on financial information presented by the spouses. However, family court frowns upon spouses who inaccurately display their finances as worse than reality. Should evidence show that one was "fudging" information, the consequences will be costly.
Assume nothing but "equitable distribution" of assets. Don't "forget" to list assets in divorce filings with family court. However, like transferring assets within a few months of filing bankruptcy, courts have no sense of humor with the dishonorable party. Disregard other divorce advice to the contrary. The court will focus on equitable distribution of assets.
Do not "fall in love" with the marital domicile. Getting a divorce, to everyone but you and your spouse, is a financial decision. Common reasons, including keeping young children in their schools or neighborhoods, should be moot points to a senior. Divorce advice that encourages you to "fight to the death" to keep your home is questionable. If it's not affordable, let it go and split proceeds as appropriate.
Don't reject divorce advice recommending that you change beneficiaries. Neglecting to delete/change beneficiaries from retirement plans, insurance policies and wills is a common -- and costly -- mistake when getting a divorce. If you want to keep your soon-to-be former spouse as a beneficiary, do so. Otherwise, remove him/her from insurance or retirement plans.
Do not forget inflation. Settlement agreements should always include inflation considerations, whether in the lump sum or pay as you go variety.
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